Pimco increased exposure to Russian default swaps in run-up to invasion

May 31

Pacific Investment Management Co.’s largest fund increased its exposure to Russian default swaps in the run-up to the country’s invasion of Ukraine by selling more than $100 million of protection to banks including Barclays Plc and Jpmorgan & Chase Co.

Pimco’s Income Fund already had almost $1 billion of bets on Russia via creditdefault swaps coming into the year, and added a net $106 million to that in the first quarter of 2022, according to fund documents filed this month with the Securities and Exchange Commission. The bulk of the new swaps were sold in January, with some added in February before the war began, according to a person with direct knowledge of the matter.

The exposure leaves Pimco as one of the biggest players in this week’s drama over whether Russia’s credit default swaps will pay out — a question that has been top of mind for many debt investors since the invasion of Ukraine in February.

Pimco is part of a panel of dealers and investors that’s set to meet Tuesday to decide whether the swaps should be triggered by Russia’s failure to include $1.9 million in extra interest on a payment made earlier this month.

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Alexander Bobikin and Alexander Ivanov, who listened to the verdict standing in a reinforced glass box at the Kotelevska district court in central Ukraine, both pleaded guilty last week.